Correlation Between Erawan and Dusit Thani
Can any of the company-specific risk be diversified away by investing in both Erawan and Dusit Thani at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Erawan and Dusit Thani into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Erawan Group and Dusit Thani Freehold, you can compare the effects of market volatilities on Erawan and Dusit Thani and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Erawan with a short position of Dusit Thani. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Dusit Thani.
Diversification Opportunities for Erawan and Dusit Thani
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Erawan and Dusit is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Dusit Thani Freehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dusit Thani Freehold and Erawan is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on The Erawan Group are associated (or correlated) with Dusit Thani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dusit Thani Freehold has no effect on the direction of Erawan i.e., Erawan and Dusit Thani go up and down completely randomly.
Pair Corralation between Erawan and Dusit Thani
Assuming the 90 days trading horizon The Erawan Group is expected to generate 1.99 times more return on investment than Dusit Thani. However, Erawan is 1.99 times more volatile than Dusit Thani Freehold. It trades about 0.01 of its potential returns per unit of risk. Dusit Thani Freehold is currently generating about -0.12 per unit of risk. If you would invest 400.00 in The Erawan Group on September 1, 2024 and sell it today you would earn a total of 0.00 from holding The Erawan Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Erawan Group vs. Dusit Thani Freehold
Performance |
| Timeline |
| Erawan Group |
| Dusit Thani Freehold |
Erawan and Dusit Thani Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Dusit Thani
The main advantage of trading using opposite Erawan and Dusit Thani positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Dusit Thani can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dusit Thani will offset losses from the drop in Dusit Thani's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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